Leverage is the ability to trade with more money than you currently have.

For example, imagine that you currently have 100 USD on your Forex account. Since GBP is in a bullish mood, you decide to buy it at 1.30000 USD/GBP. In a couple of hours, it reaches the resistance level of 1.30500 and you sell your GBP. At the end of the day, you’d have made 0.5 USD — which is respectable, but not that impressive. You certainly won’t be able to live off this profit.